Duke Energy to buy Progress Energy in $26B deal

Duke Energy Corp. plans to buy Progress Energy Inc. in a $26 billion deal that would create the largest utility in the nation with a footprint that extends into southern Ohio.

The transaction between Charlotte, N.C.-based Duke (NYSE:DUK) and Raleigh, N.C.-based Progress (NYSE:PGN) accounts for $13.7 billion in stock and about $12.2 billion in debt. In addition to being the largest utility in the U.S. based on power capacity and customers, Duke would own the largest network of nuclear power plants in the country.

Progress has about 3 million customers in the Carolinas and Florida, while Duke's electricity arm has about 4 million customers, mostly in the Midwest. Duke Energy has about 685,000 customers in Ohio, but that pales in comparison to Columbus-based American Electric Power Company Inc. (NYSE:AEP), which services about 1.5 million customers in the state.

The company headquarters will remain in Charlotte, and Progress Chief Executive Bill Johnson will run the combined company. Duke CEO Jim Rogers, who headed Cincinnati-based Cinergy Corp. when it was combined with Duke in 2006, will remain chairman. He will be the company’s principal spokesman on energy policy and will continue to work in government relations.

Duke says the deal for Progress will add to earnings in the first year after the deal closes.

With more than 80 percent of North Carolina's generation capacity in the hands of one utility, the concentration in the Carolinas will allow the combined company to save significant money on employee costs. The companies expect layoffs in the merger, but have not determined how many jobs will be eliminated.

Duke eliminated almost 1,500 jobs when it bought Cincinnati-based Cinergy. The company employs about 3,500 workers in the Cincinnati area.

Both boards have approved the merger. The companies must get approval from state regulators in the Carolinas, the Federal Energy Regulatory Commission and must clear antitrust reviews. Shareholders must also approve the plan. That could take as much as a year.